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Dodd Proposes Senate Version of Financial Reform

This week, Senate Banking Committee chairman, Christopher Dodd (CT-D), introduced a sweeping financial reform bill, the "Restoring American Financial Stability Act of 2009."  Dodd's bill goes further than Administration proposals and financial reform bills pending in the House of Representatives, proposing to remove all bank supervision responsibilities away from the Federal Reserve and the Federal Deposit Insurance Corporation, and place them with a single new agency, the Financial Institutions Regulatory Administration (FIRA).   The bill also proposes, among other things, to:

 

    • Eliminate the federal thrift charter, and subject former thrifts and savings associations to the full panoply of banking regulation and federal oversight;

 

 

 

    • Eliminate the regulatory exemption for hedge fund advisers, and bring hedge funds into a regulatory and reporting regime similar that of regulated investment companies;

 

 

 

    • Create an Office of National Insurance to provide oversight and regulation of insurance companies;

 

 

 

    • Make changes to the regulation of bank holding companies;

 

 

 

    • Eliminate the broker-dealer exception from the definition of "investment adviser" in the Investment Advisers Act, subjecting broker-dealers and their dealings with their customers to the Investment Advisers Act;

 

 

 

    • Require registration of, and reform the clearing, reporting, payment, supervision, and recordkeeping for over-the-counter derivatives, specifically swaps;

 

 

 

    • Improve the regulation of credit rating agencies;

 

 

 

    • Strengthen whistleblower protections for those reporting violations securities law and financial requlations;

 

 

 

    • Set standards for executive compensation;

 

 

 

    • Improve the management of the SEC;

 

 

 

    • Provide aiding and abetting liability in private securities fraud actions;

 

 

 

    • Strengthen corporate governance through proxy access provisions and shareholder nominations; and

 

 

 

    • Establish a Consumer Financial Protection Agency.

 


The full text of the Restoring American Financial Stability Act of 2009 is available at:  http://lawprofessors.typepad.com/files/senatebankingregulatoryreformproposal.pdf